FTT, money laundering and co.: hardly any progress in the fight for tax justice at EU level

EU level has been promising more tax fairness for years

Already two years have passed since EU Commission President Jean-Claude Juncker promised to ensure more tax justice resp. an end of tax tricks by large companies and wealthy individuals. Subsequently, the Commission has presented several legislative proposals, which are now debated in particular by the EU Finance Ministers in the so-called ECOFIN Council.
The proposals, which are debated, include among other the plan to introduce a Financial Transaction Tax, which has been negotiated by 10 Member States for 3 years, a proposal to combat tax avoidance, a text on improving the EU-wide exchange of information to prevent money laundering and tax evasion as well as a recently published draft proposal on corporate taxation.

No agreement on the “Anti Tax Avoidance Directive”

Unfortunately, it transpired during the meeting of the Finance Ministers on 6 December 2016 that some EU Member States are obviously not interested in tax justice, which meant that it was not possible to take the decision on the “Anti Tax Avoidance Directive”. Sven Giegold, speaker on economic and monetary affairs of the Greens at the European Parliament, attributes the delay of the decision on the legal act to a blocking policy adopted by EU tax haven countries, which is led by The Netherlands and Great Britain. According to Giegold, the intention of these countries is to prevent stricter rules against tax avoidance.

Decision on Financial Transaction Tax postponed again

There is also no success to be reported regarding the Financial Transaction Tax, which is negotiated by 10 EU Member States. The original plan was to adopt the tax in December – at last after three long years of negotiations. According to Austria’s Finance Minister Schelling, who chairs the group of negotiators, agreement should now be reached in January 2017. An excuse, which has been used for months to delay the decision on the introduction of the Financial Transaction Tax has been the “uncertainty what impact it would have on pension funds and the real economy”. Relevant findings shall be presented in January.
Apart from that, Belgium has been for some time the shaky candidate, regarding her participation in the tax. Recently, some Belgian politicians have made the case against introducing the FTT. In addition, the statements of the German Finance Minister Wolfgang Schäuble also do little to help the cause: the introduction of a FTT by only 10 countries would not be optimal, better would be a global solution. However, Schäuble does not give any clues how such a tax could be introduced at global level, given the fact that it is proving so difficult just to introduce a tax, which only involves 10 countries.

New rules adapted for the exchange of information

At least the ECOFIN Council has one little success to report: the EU Finance Ministers have adopted the Directive on Access to beneficial ownership information. An improved exchange of information shall prevent money laundering and tax evasion. The new legal act shall be implemented from 1 January 2018.
The meeting of the Finance Ministers has made one thing clear: there is still a long way to go towards tax fairness. Only if public pressure on the responsible EU policy makers is kept up, it will be possible to put an end to the tax tricks of large companies and the super rich.